AT&T makes bid for Yahoo

27 May 2016 |

AT&T, which previously decided against making an offer for Yahoo in April this year, has been reported as making a new bid for the company.

AT&T has kept an interest in the process through its stake in YP Holdings, which had proposed a merger with a subsidiary spun out of Yahoo’s core business. However, YP is no longer pursuing the transaction.

AT&T is pitting itself against rival Verizon Communications which has been considered a frontrunner to buy Yahoo. Verizon remains the favourite to make the acquisition of Yahoo, however, reports suggest that it didn’t submit one of the highest first-round bids.

AT&T could easily afford the acquisition with its market capitalisation of $237 billion. The most obvious business strategy for an AT&T purchase would be to pair Yahoo’s algorithm-based advertising technology with its mobile video service.

Earlier this month AT&T ended a partnership with Yahoo, handing a web-hosting contract for its mobile and desktop customer portal to Synacor Inc, an internet-services company with just $110 million in revenue.

An obvious driver of an AT&T buy may also be Verizon’s purchase of AOL Inc. last year, which gave it advertising technology and media properties similar to Yahoo’s.

Verizon - which has expressed an interest in buying Yahoo - may still be a more likely partner than AT&T.

Yahoo’s financial advisers are spending extra time considering proposals from companies and private equity firms that made higher bids, but don’t know Yahoo’s business as well as AT&T.

Yahoo’s chief executive officer Marissa Mayer started a review of the company’s options in February after her failure to turnaround the company led to shareholder pressure to find a buyer.